BoE launches latest SWES exercise

Written by Adam Cadle

13/11/2023

The Bank of England (BoE) has published the latest phase of the System-wide Exploratory Scenario (SWES) with bank and non-bank participants provided a hypothetical stress scenario.

SWES participants, including insurers, have been supplied with the details of a severe, but plausible, stress scenario.

“This is faster, wider ranging, and more persistent than those seen in recent period of market instability, such as the March 2020 ‘dash for cash’ and September/October 2022 LDI episode, and includes a ten day shock to rates and risky asset prices,” the BoE stated.

The exercise aims to improve understanding of how banks and non-banks behave in stressed conditions.

SWES participants are now considering the scenario and will be submitting their responses to it in January 2024. The second round of the scenario phase, which will reflect the actions that the participants take in the first round, will be launched in Q2 2024. The Bank expects to publish a final report on the SWES by end-2024.

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